Time Warner Cable 2009 Annual Report Download - page 116

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TIME WARNER CABLE INC.
SUPPLEMENTARY INFORMATION
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Time Warner Entertainment Company, L.P. (“TWE”) and TW NY Cable Holding Inc. (“TW NY” and, together with TWE, the
“Guarantor Subsidiaries”) are subsidiaries of Time Warner Cable Inc. (the “Parent Company”). The Guarantor Subsidiaries have fully
and unconditionally, jointly and severally, directly or indirectly, guaranteed the debt issued by the Parent Company in its 2007 registered
exchange offer and its 2009 and 2008 public offerings. The Parent Company owns 100% of the voting interests, directly or indirectly, of
both TWE and TW NY.
The Securities and Exchange Commission’s rules require that condensed consolidating financial information be provided for
subsidiaries that have guaranteed debt of a registrant issued in a public offering, where each such guarantee is full and unconditional and
where the voting interests of the subsidiaries are 100% owned by the registrant. Set forth below are condensed consolidating financial
statements presenting the financial position, results of operations, and cash flows of (i) the Parent Company, (ii) the Guarantor
Subsidiaries on a combined basis (as such guarantees are joint and several), (iii) the direct and indirect non-guarantor subsidiaries of the
Parent Company (the “Non-Guarantor Subsidiaries”) on a combined basis and (iv) the eliminations necessary to arrive at the information
for Time Warner Cable Inc. on a consolidated basis.
There are no legal or regulatory restrictions on the Parent Company’s ability to obtain funds from any of its subsidiaries through
dividends, loans or advances.
These condensed consolidating financial statements should be read in conjunction with the consolidated financial statements of
Time Warner Cable Inc.
Basis of Presentation
In presenting the condensed consolidating financial statements, the equity method of accounting has been applied to (i) the Parent
Company’s interests in the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries, (ii) the Guarantor Subsidiaries’ interests in the
Non-Guarantor Subsidiaries and (iii) the Non-Guarantor Subsidiaries interests in the Guarantor Subsidiaries, where applicable, even
though all such subsidiaries meet the requirements to be consolidated under U.S. generally accepted accounting principles. All
intercompany balances and transactions between the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries
have been eliminated, as shown in the column “Eliminations.”
The accounting bases in all subsidiaries, including goodwill and identified intangible assets, have been allocated to the applicable
subsidiaries.
Prior to March 12, 2009, Time Warner Cable Inc. was not a separate taxable entity for U.S. federal and various state income tax
purposes and its results were included in the consolidated U.S. federal and certain state income tax returns of Time Warner Inc. In the
condensed consolidating financial statements, income tax (benefit) provision has been presented based on each subsidiary’s legal entity
basis. Deferred taxes of the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries have been presented based
upon the temporary differences between the carrying amounts of the respective assets and liabilities of the applicable entities.
Costs incurred by the Parent Company, the Guarantor Subsidiaries or the Non-Guarantor Subsidiaries are allocated to the various
entities based on the relative usage of such expenses.
During 2009 certain Non-Guarantor Subsidiaries were merged into the Guarantor Subsidiaries. These mergers are reflected in the
accompanying condensed consolidating financial statements in the period in which the mergers occurred.
Prior to October 1, 2009, interest income (expense), net, was determined based on third-party debt and the relevant intercompany
amounts within the respective legal entity. Beginning October 1, 2009, the Parent Company began to allocate interest expense to certain
subsidiaries based on each subsidiary’s contribution to revenues. This allocation serves to reduce the Parent Company’s interest expense
and increase the interest expense of both the Guarantor Subsidiaries and Non-Guarantor Subsidiaries.
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